Creating company policies

At an early stage startup one doesn’t need detailed accounting policies. But a general guideline helps set up some order. Most common policies are Travel and Entertainment Policy, Capitalization policy, Revenue Recognition policy.

The T&E policy could be detailed but what usually works for startups is a generic policy which conveys what the culture is regarding spending. Letting people take ownership of the company’s money is a good way to define the policy. Spend the company money like you would yours, could be how the policy is written.

Capitalization and Revenue Recognition have to have a bit more structured as these are governed by Generally Accepted Accounting Principles. But you still have some leeway in defining the policies.

For example, the capitalization policy will state whether the company will book the purchase of an asset like computer as a fixed asset and then depreciate over a period of time or would it book the entire purchase as an expense in the period it was bought. The policy defines what will be capitalized, usually for small companies anything under a particular amount ($1000 or $500) is expensed vs. capitalized. Big companies would usually have a bigger threshold for capitalizing.

News

On November 10,1494, the first book about double entry systems was published by the Italian mathematician, Lua Pacioli, also known as the father of accounting. In his honor the day is celebrated as the International Accountants Day! To all fellow accountants, keep up the great work.

Italy's Antitrust authority fined the big 4 (Ernst & Young, Deloitte, KPMG and PWC) a total of 23 million euros for allegedly conspiring and colluding to divvy up large public consultancy contracts. Looks like the Big 4 need to revise their Ethics class!

Two more corporate shareholders filed a legal claim against Toshiba, linked to the the 2015 accounting scandal, seeking $5.08 million in compensation for damages. This brings the total damages sought to $1.2 billion!